Jyoti Structures, Monnet Ispat lenders to put companies assets on the block, again

Lenders to Monnet Ispat and Jyoti Structuresare set to go for another round of bidding for the assets after both the companies ended up with lone bidders in the final stage of bidding. With time on hand, the committee of creditors wants to assess market interest again and hope for better valuations than the current ones.

ET had reported earlier that a consortium of Aion Capital Partners and JSW emerged as the only contender for acquiring Monnet Ispat while a group of professionals led by Sharad Sanghi, who sold his company Netmagic to Japan’s telecoms major NTT Communication five years ago, emerged as the sole bidder to acquire Jyoti Structures.

“Nowhere in the law has it specified that we have to seek rebids if we get a single bidder, but we have time on hand and we want to be careful in case any questions over the selection of bidders arises in the future,” said a banker who did not wish to be named.

Both the stressed companies which were nominated by the Reserve Bank of India to undergo the bankruptcy process in June this year have seen several high-profile bidders back out at the last moment. While Tata Steel, Vedanta Group, TPG, Blackstone, Edelweiss, Shyam Metalics and Hong Kong-based SSG Capital were evaluating Monnet Ispat earlier, they failed to submit their final bids.

Likewise, despite the initial expression of interest from multiple suitors, including the Shapoorji Pallonji Group, Kalpataru Power Transmission and RPG Group’s KEC International for the troubled Jyoti Structures, only one resolution plan was eventually submitted on the last day of submission. While Monnet owes Rs 10,300 crore to lenders, Jyoti Structures owes Rs 7000 crore to banks.

“The committee of creditors for Monnet Ispat & Jyoti Structures is expected to meet this week to take a final call on rebidding these assets,” said another banker. “We have to be very careful, extensive due diligence should suggest that interested parties at are an arm’s length with the promoters of these companies.”

In June, RBI had shortlisted 12 companies that would undergo the bankruptcy process having a total debt of over Rs 2 lakh crore. Then, in August, the regulator sent a second list of 28 defaulters to creditors to initiate debt resolution before December 13, failing which these cases have to be sent to NCLT before December 31. But resolutions to these cases have been negligible in the past six months.

Despite many suitors lining up at the expression of interest (EoI) stage, bankers have seen a fall in interest and few bidders at the final binding stage. What has worried lenders is the continued drop in bid valuations submitted by interested parties from the EoI to the binding stage.

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